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description

Daimler-Benz AG, a large automobile manufacturer in Europe, and the Chrysler Corporation, one of the Big Three auto makers in North America, merged to create DaimlerChrysler. On the surface, everything seemed to be going as planned. In reality, all was not well. Organizational changes, conflicting information, and doubts about the future structure of the company resulted in the departure of numerous Chrysler employees, including many mid-level managers and engineers. While initially amalgamated into Daimler, the Chrysler Group ended up as one of three separate automotive divisions. In 2001, DaimlerChrysler recorded a $1.2 billion loss in operating profit (before one-time effects). Estimates for 2002 called for a break-even result, but the company was facing a $9 billion lawsuit filed by the 5th largest shareholder, who claimed that Daimler had deceived investors by touting the venture as a merger of equals.

learning objective:

To demonstrate the challenges encountered when integrating two very different cultures and how, if handled poorly, it can have a major impact on employees, the media, and investors; the credibility lost when publicized intentions are radically different from the actual execution; and the difficulties in integrating not only two radically different organizational cultures, but two different national cultures as well. Also to provide an opportunity for students to assess a firm's strategy, structure, processes, systems, policies, tasks, and people.